Town staff say there are few options other than debt to fund new sidewalks, roads, parks and public safety stations - and the town likely would have to raise taxes to pay the bill. The Cary Town Council signaled at a recent retreat that it would put the issue to a popular vote alongside the presidential election this year.

"Cary's population continues to grow, with demands and needs growing with it," Mayor Harold Weinbrecht wrote recently on his blog. "We are rapidly reaching a point where levels of service may be threatened if some projects are continued to be delayed."

Cary hasn't borrowed money since the recession began more than three years ago, and it hasn't raised residential taxes in more than 20 years, but demand for town services has increased while revenue sources have diminished.

Town government has less money available for general capital spending now than in the last decade. Most notably, the investment profits that put a record $5.8 million in the pot for non-utility capital projects in fiscal year 2008 have fallen to a projected $452,000 for fiscal year 2012.

Meanwhile, Cary has used more of its operating margin - the cushion between its income and its expenses - to make debt payments, which will total $14 million for this fiscal year.

With all this in mind, the council asked staff to prepare more information on the bond referendum, and signaled its willingness to put the new debt to a vote. The town already has voters' permission to borrow up to $60 million, but council members want to ask again. They say the current authority was granted in 2003, in a vastly different context.

"We have always argued that the growth is paying and that we would not have a tax increase - many of the past bond referendums passed easily because folks saw that as an opportunity without their taxes going up," said Councilman Jack Smith at the town's annual retreat Jan. 14.

"There's a consequence to no-growth, low-growth, and I think that's coming to fruition right now," Smith said.

Debt is nothing new to Cary, but the prospect of a tax increase is; the last change to the tax rate was a major drop in 2008, from 42 cents to 33 cents per $100 of property value, the lowest rate in Wake County.

Without more tax revenue, the town can tackle only a limited list of general capital projects, mostly preserving and maintaining the facilities it already has, said Scott Fogleman, the town's budget director.

Cary staff and officials have been signaling the possibility of a tax increase for months. In his recent re-election campaign, Weinbrecht said a tax increase was inevitable, but he framed it as a long-term issue.

Neither Cary staff nor leaders have established how much debt they'll ask residents to approve, or the size of the corresponding tax hike. The town's 10-year capital spending plan, updated last year, includes $200 million in projects, ranging from fire stations to new parks, sidewalks and street upgrades. The town also is considering another $740 million in projects.

In a presentation, Fogleman gave one example: The town could borrow $150 million, but the town staff has stressed it can not yet estimate the size of the proposed bond package. Staff and council will prioritize a list of projects as the year winds on. Mayor Weinbrecht expects the council to discuss the referendum at a February or March meeting. "We need to ask the citizens, 'What would you like to do?' " he said.

The new debt would not pay for utility projects such as sewer and water lines. Those are powered by a separate fund, which also has contracted significantly in the last few years.

History

Before 1998, Cary spent comparatively little money on capital projects, such as upgrades to its parks, fire and transportation services. The annual spending rarely, if ever, topped $10 million.

But from fiscal year 1999 to fiscal 2009, the town spent an average of $44 million per year, about a half-billion dollars in total, to upgrade its infrastructure on pace with a residential boom. That spending slowed dramatically during the recession.

The town cut capital spending from almost $80 million to about $5 million from fiscal year 2009 to fiscal year 2010. Cary saved money by canceling or delaying dozens of planned town projects.